Preparing your budget for your dream home

Updated: Nov 9

Purchasing a new home is undoubtedly an exciting decision, but it is also an extremely emotional one. A home is where family traditions are brought to life and where lifelong memories are made. However, in addition to the immense pride that comes with having a place to call your own, comes the heavy costs that tend to come along with purchasing your new place, which you may not even be aware of.


When purchasing property, it is important to look beyond just the purchase price — there are a number of other costs that should be included into your budget when you plan on purchasing property. This article sets out to briefly make the reader aware of these costs.


Transferring Attorney Fee


Upon conclusion of the sale agreement, the seller must appoint a transferring attorney, the fee of which is covered by the purchaser. The transferring attorney charges a fee for his professional services calculated in accordance with the prescribed tariff provided for by the Legal Practice Council. In addition to the general fee charged by the transferring attorney, they will also charge a fee for transfer duty and deeds office fees which is also covered by the purchaser.


Property Search Fee


The transferring attorney is also responsible for carrying out a deeds search. The purpose of the deeds search is to ensure that there are no existing conditions in the title deed that can preclude the transaction from proceeding. The costs of a deeds search range from R75.00 to R200.00 inclusive of VAT.


Rates Clearance Fees


The transferring attorney also obtains a Rates Clearance Certificate from the local Municipality. This certificate verifies that there are no outstanding rates and taxes due by the seller, and as such, the Municipality only issues a Rates Clearance Certificate once all outstanding rates are paid. The cost for a Rates and Clearance Certificate currently stand at R165.00, depending on the Municipality. This cost is payable by the purchaser, who is also responsible for paying all rates and taxes 4 months in advance before the registration of the property can take place.


Transfer Duty


Transfer duty is a tax levied by SARS and is payable by the purchaser. The South African government establishes the scale at which transfer duty can be calculated. The scale can be accessed by clicking on the following link https://www.sars.gov.za/tax-rates/transfer-duty/ .


Deeds Office Fees


The Deeds Office charges a fee for the registration of every transaction. This fee is collected by the transferring attorney from the buyer and paid to the Deeds Office upon registration. The Deeds Office fee for transferring a property is charged on a sliding scale in accordance with the purchase price of the property. The sliding scale works as follows:

Purchase Price:

Deeds Office Fee:

R150 000 or less

R70.00

R150 000 up to and inclusive of R300 000

R350.00

R300 000 up to and inclusive of R 500 000

R550.00

R500 000 up to and inclusive of R 1 000 000

R650.00

R 1 000 000 up to and inclusive of R2 000 000

R850.00

R3 000 000 up to and inclusive of R 5 000 000

R1050.00

Over R 5 000 000

R 1250.00

Lastly, it is important to note that a sale agreement will often contain a clause stipulating that “all risks and benefits in the property will pass to purchaser upon registration in the Deeds Office”. The consequence of this clause is that the purchaser will become liable for all expenses in respect of the property. Such expenses include municipal rates and taxes levied on the property.


In light of the above, it is clear that there exists quite a number of hidden costs in purchasing a property. It is therefore imperative for any prospective purchaser to familiarise themselves with these costs to enable them to effectively budget for their dream home.


This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)